For The National Corridors Initiative
Carmichael Conference On The Future Of American Transportation
St. Louis. Missouri - January 28, 2008

I appreciate the opportunity to address this important conference. The sponsors decision to name this gathering for me truly is a great honor. When I recall the hundreds of speeches and articles I have prepared over the past 40 years, I hope they have contributed to the public discussion about transportation policy. While others have done the same, we all operated under a severe handicap. It is difficult to have a meaningful public discussion when so few people are paying attention. Perhaps, the current energy crisis will create a more favorable climate.

My view of the history of U.S. transportation policy is less critical than you might expect. For the most part the policy decisions were sound - given the facts known at the time. 19th Century technology gave us the railroad - a wonderful steel-wheel-on-steel-rail system that dramatically cut costs and conveniently served both freight and passenger users. Unfortunately, we built far more rail mileage than the economy needed. Then combustion engine breakthroughs delivered the automobile and truck, equally wondrous innovations - affordable, and even more flexible than the railroad. Americans gained a means of personal transportation whose convenience has not been surpassed. Just as important was the fuel source. Gasoline and diesel. Affordable and portable. Of the two, portability may be more meaningful. Then came the airplane, which collapsed time - from St. Louis to California jetliner, four hours... by train, 50 hours - auto, three days.

During the 20th Century our government promoted highways, inland waterways, airports, and urban transit. With hindsight, most of us would agree that government over-promoted these modes. Meanwhile, that same government over-regulated railroads and airline companies. We ended up with todays very unbalanced transportation system. And because the modes were developed at different times, their infrastructure was built in isolation. Connections between modes were poor or nonexistent. After World War II government also adopted a policy of cheap energy. Initially that policy was sensible, but the politicians refused to abandon it in the face of strong evidence that we were headed for supply trouble - and the policy of cheap energy would only make things worse.

We built the Interstate highways - another grand achievement, and a necessary one. The great tragedy of federal policy was that in 1956 when Congress authorized the Interstates it did nor also deregulate freight railroads... nor deregulate airline service... nor repeal the disastrous price controls on natural gas. If ail of those actions had been taken in 1956, we might not need a Carmichael Conference in 2008.

During the energy crisis of the 1970s the politicians made one policy quite clear - it was to be business as usual for highway users. Meanwhile, to meet air quality mandates, state and local officials decided to do nothing about highway vehicles, which generated most of the urban-area emissions, bur instead adopted policies that drove industry out of urban regions. This only worsened the pattern in which Americans increasingly lived in one area, worked in another, and shopped in a third.

What about todays situation? Government has decided, once again, that it is to be business as usual for highway users. Ethanol is the magic bullet, it is a questionable strategy in terms of economics, energy supply, and environmental impact - and it imposes a gigantic hidden cost upon the American consumer. And now along comes another blue ribbon study commission which proposes a gas tax increase of up to 40 cents just to restore our crumbling highways to their previous condition - hut not solve growing congestion.

I have a better idea. The Interstate system originally was intended to connect all cities of 100,000 population to a national system. Great concept. Then the politicians decided to add local routes to serve urban commuters. Today, these commuter routes are the segments with the worst gridlock and the greatest needs for repair. We ought to convert the urban interstates to toll roads. Even better, we ought to privatize them.

Meanwhile, we should build upon what the freight railroads already are doing. During the past quarter-century a global intermodal freight network evolved. It has given freight customers worldwide a system that is faster, safer, more reliable, more energy- efficient, and more economically efficient. It makes partners of container ships, railroads and trucks. It requires highly efficient terminals for seamless interchange of freight. It is a fantastic system that continues to grow. North Americas railroads have spent huge sums of money to build and operate their segments of this global network.

Eventually, I believe that we must build or upgrade about 20,000 miles of freight corridors capable of train speeds in excess 90 miles an hour - double-tracked, equipped with GPS, and grade-separated. That network will be augmented by as much as another 10,000 miles of conventional routings. I call this Interstate II, a high-efficiency network of steel stretching from coast to coast and from Mexico City to Montreal. The freight railroads have begun this process. Their capital contributions should be augmented by public investment. This can rake several forms: Cost-sharing specific projects, which already is occurring, Tax credits. Tax-exempt financing secured by public agencies.

It is important for passenger advocates to understand and accept an important truth in dealing with our transportation needs... and recognizing the related issues of energy supply and global warming impacts. The North American railroad systems priority contribution toward making things better will be through substantial increases in freight volume. Certain segments of the Interstate II route system will accommodate passenger trains, but in no case should a passenger project be pursued if it diminishes that corridor segments current or future freight-hauling capability. The State of Washington, for example, is sponsoring a third track for passenger rail on its main corridor.

Here are several priorities for developing rail passenger corridors.

Number 1. Start with ruthlessly objective market analysis. The aim is to learn the truth about potential ridership, capital costs, and operating needs, not to justify a pre- determined project.

Number 2. Build the strongest corridors first. Also recognize that some corridors will need to he launched as conventional routes because the initial market demand wont justify the capital investment required far true high-speed routes. As the market grows, the corridor can be upgraded.

Number 3. Plan and build intermodally. Intermodal connections are critical to a corridors success. Remember, virtually no trips begin or end at a railroad station. Without convenient and efficient intermodal connections, a corridors ridership potential will be reduced drastically. Think of it this way. There really are not any people traveling from St. Louis to Chicago. Every trip starts at a specific street address somewhere in the St. Louis area, which encompasses about 500 square miles, and ends at a specific street address in the Chicago area, a region of roughly 2.400 square miles.

Number 4. Maximize private-sector involvement. At strong project will attract private investment. Equally important, the private sector understands market analysis far better than the public sector. It also knows more about what it takes to meet customer expectations. Government agencies must move quickly to create public-private partnerships.

Number 5. Be bus advocates as well as rail advocates. Why? The bus will be an essential modal partner in nearly every rail passenger corridor. Busses can reach some customers you cant serve. They can go where rail cant go. Be ready to admit that they can serve some customer better than rail can - and that include some long-distance markets. In urban regions, they are the flexible, low-cost transit mode. As the geography of urban demand changes, a bus system can accommodate it, better than rail, light-rail, or - heaven forbid - the streetcar.

Thank you for this honor to be with you today.

About Gil Carmichael

A leading authority on railroad and intermodal transportation policy, Gilbert E. Carmichael served as Federal Railroad Administrator in the administration of the former President George Bush from 1989 to 1993. He was appointed, by the Secretary of Transportation, to the Amtrak board and served from 1989 to 1993. He is Senior Chairman of the Board of the University of Denvers Intermodal Transportation Institute and in his hometown, Meridian, Mississippi; he serves on the board of Great Southern National Bank. Mr. Carmichael is Senior Partner in Missouth Properties, L.P., a family owned, Commercial Real Estate Enterprise.

Mr. Carmichael was one of the founders creating the University of Denver Intermodal Transportation Institute, which is developing a master level degree education and research programs to prepare graduates for a transportation environment in which intermodal operations have become a global standard. In 1997 he chaired the North American Intermodal Summit, which brought together the Transportation Secretaries of the United States, Canada, and Mexico for high-level discussions on intermodal policy.

In 1998 Mr. Carmichael was appointed to the Amtrak Reform Council by Majority Leader Senator Trent Lott, and in January 1999 become the council chairman. The ARC had the duty of evaluating Amtrak financial performance and recommending a restructuring plan if the corporation was unable to achieve self-sufficiency. The council report was completed in December 2002 and key recommendations were adopted by the Bush Administration.

As Federal Railroad Administrator from 1989 to 1993 he managed the nation rail safety and research programs, supervised international railway technical assistance programs, and sponsored the first World Railways Congress in 1991 which brought together senior government and railway officials from 60 nations. In 1990 he received the Founder Gold Medal Award from the Pan American Railway Congress for his paper on the role of rail transportation in the 21st Century. He also helped to develop President Bushs National Transportation Policy, to reform laws to permit intermodal transportation initiatives, and formulated new federal policy toward the rail mode and Amtrak, the nation rail passenger service. He chaired the three-year, $29 million National Maglev Initiative and proposed a network of regional high-speed rail passenger corridors now under development.

President Ford appointed him a member of the National Transportation Policy Study Commission from 1976 to 1979; he chaired its subcommittee on advanced technology. He served by Presidential appointment, on and as chairman of the National Highway Safety Advisory Committee to the Secretary of Transportation from 1973 to 1976.

Mr. Carmichael has been a pioneer in transportation in his state. In 1987 he helped originate, author and pass a $1.6 billion, 1077-mile statewide four-lane highway construction program, and was also instrumental in the creation of a 700-mile regional railroad in East Mississippi and West Alabama, now a major part of the Kansas City Southern Railroad.

He has presented and published numerous papers on the transportation industry, promoting the need for a North America and global intermodal freight and passenger system utilizing the world rail network in concert with the other modes.

He holds a business degree from Texas A&M University and was a fellow in the Institute of Politics, Kennedy School of Government, Harvard University, in 1976. A resident of Meridian, Mississippi, he is an Episcopalian, is married to Carolyn White, and they have one son, G. Scott Carmichael.

[ Publishers Note: This is the fourth in a series of addresses--- last weeks was by NCI President Jim RePass --- --- from the Carmichael Conference on the Future of American Transportation held January 28-29 at the Hyatt Regency, St. Louis, MO.

Destination:Freedom will publish addresses from this important American conference each week, so that those who could not attend can also participate in the debate, and also benefit from the thoughts of the impressive list of American transportation leaders who did attend, and spoke to us. It is also our intention to collect the speeches, and presentations, into a single CD-ROM so that the proceedings can be more widely distributed. ]